Low-grade imports raise India's coal emissions

01 Aug 2023

India's yearly coal emissions were projected to reach new heights in 2023. This was due to the power sector having released record amounts of carbon dioxide in the first half of the year. Additionally, there was an increase in the import of low-quality and highly polluting coal on the global market.

In the initial six months of 2023, Indian power producers emitted more than 500 million tonnes of CO2 through the combustion of coal. This marked a 4% increase compared to the same timeframe in 2022, during which a new annual record for coal power emissions had been established.

The power utilities in India use a combination of domestically-sourced low-grade coal and imports to fuel their power plants. The importation of coal serves as an early indicator of the potential emissions from major coastal power facilities, some of which are the largest in the nation.

Approximately 80% of India's thermal coal imports during the first half of 2023 originated from countries such as Indonesia, South Africa, and Russia. These nations are known for primarily exporting thermal coal of inferior quality, which emits both CO2 and sulphur dioxide upon combustion in power plants. Furthermore, around 7% of India's thermal coal imports came from Australia.

Australia is known for supplying coal that burns more cleanly compared to that of other global markets.

However, there appears to be a future decline in the availability of Australian coal due to China, the leading global coal importer, having resumed coal trade with Australia following an improvement in bilateral relations.

Consequently, the reduced access to Australian coal on the global market is anticipated to result in higher Australian coal prices compared to competing grades. This shift is likely to direct buyers who are sensitive to costs towards suppliers that offer coal of lower quality and at a more affordable price.

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